Option types

Naming conventions are used to help identify properties common to many different types of options. These include:

Vanillaoption – any option that is not exotic.- European option – an option that may only be exercised on expiration.- American option – an option that may be exercised on any trading day on or before expiry.- Bermudan option – an option that may be exercised only on specified dates on or before expiration.

Exotic option – any of a broad category of options that may include complex financial structures.- Barrieroption – any option with the general characteristic that the underlying security’s price must pass a certain level or “barrier” before it can be exercised.